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FHFA Friday – Potential Lawsuit Tanks Banks

Sue The Banks$30 Billion – that’s bound to get their attention!  

According to the WSJ, the Federal Housing Finance Agency is set to file suits against more than a dozen big banks, accusing them of misrepresenting the quality of mortgage securities they assembled and sold at the height of the housing bubble. The suits, which are expected to be filed in the coming days in federal court, are aimed at Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, among others, according to three individuals briefed on the matter.

The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims arguing the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.

Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers. In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.  

Tim Rood, who worked at Fannie Mae until 2006 and is now a partner at the Collingwood Group, which advises banks and servicers on housing-related issues, agrees with what I told Members in last night’s chat:  

"While I believe that F.H.F.A. is acting responsibly in its role as conservator, I am afraid that we risk pushing these guys off of a cliff and we’re going to have to bail out the banks again.”

In other words – MADNESS!  What was the point of spending Trillions of Dollars bailing out the Banks if you are going to turn around and sue them for $30Bn and drop their stock price another Trillion, causing them to need another bailout?  

Perhaps this is the denouement of a week of scary market rumors that seem to have been designed to stop the markets from breaking too high.  We were speculating on this last night in Member Chat before this latest bit of news even happened.  Clearly this is not really "NEWS" as the UBS suit was filed a month ago (July 27th), sending that bank’s stock from $17.50 to $13.50 on Aug 8th (down 23%) along with the rest of the Financials as XLF fell from $15 to $12 (20%) and BAC, whose Countrywide unit is the poster child for fraudulent behavior, fell from $10 to $6.50.  

Since then, UBS came back to $14.50 (up 7.5%), XLF made it to $13.50 (up 12.5%) and BAC hit $8.50 (up 30%) aided by a loan from Warren Buffett.  Unless we assume Buffett and the rest of the investing community were unable to put 2 and 2 together from the UBS suit – I would say that this is very much old news and this dip that incites retail panic will be a good opportunity to buy like Buffett and pick up some of these stocks on the way down.  

8:30 Update:  No jobs were added in the US in August.  Not the figurative "no" but ZERO, the Non-Farm Payroll number was exactly zero.  That has sent our futures off a cliff and we are down 1.5% now, still trailing Europe, who are down over 3% at 8:35.  This will send Treasuries flying and we will short TLT up around $111, hopefully selling the Sept $112 calls for $1.60 and buying the $114/111 bear call spread for $2 for net .40 on the $3 spread.  That’s a fun way to sell into the initial excitement on that trade.  

Keep in mind that 45,000 jobs were subtracted due to the Verizon Strike.  Those jobs will be added back next month.  The only other sectors that had significant lay-offs were Government, with 17,000 (the brilliance of austerity!) and Retail, which shed 7,800 jobs.  35,500 Health Care Jobs were added along with 34,000 Temporary Workers and 28,000 Professionals Workers gained jobs – this is exactly the kind of overreaction to a headline number that we like to go long into! 

We’ll see what else looks oversold at the open so expect some trade ideas in the Morning Alert to Members (we already hedged for this drop earlier in the week).  Yesterday’s alert had the SDS weekly $22 calls at .70 and they finished the day at $1.06 (up 51%) after a wild ride at the 10 am ISM report.  Unfortunately, our other trade idea of the morning was GLD Oct $160 puts at $1.50 and those finished the day at $1.33 (down 11%) but our plan was to roll those to a higher strike and DD if gold took off towards $2,000 (we already had a long spread from last week for that) and this morning gold is up another $50 at $1,877 as EVERYONE is panicking into gold.  

We’re not going to catch any falling knives into the weekend but we do look forward to being able to fill out some of the September’s Dozen picks that got away from us.  Obviously, with the economy stalling and jobs at ZERO, this should push our expectations of QE3 from "probably" to "how much."  Unless the Fed is going to blow off their mandate, we are in danger of both deflation and 10% unemployment (U-6 Unemployment is already 16.1%) if they fail to act quickly and decisively.  

All in all, it’s going to be a good morning for some bottom fishing – they certainly look like they’ll be biting!  

Have a great weekend, 

- Phil

 


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  1. dclark41

    Phil
    Now this certainly won’t help BNO trade.

    http://m.yahoo.com/w/news_america/eu-bans-imports-syrian-oil-121615931.html?orig_host_hdr=news.yahoo.com&.intl=us&.lang=en-us

  2. exec

    Phil/Banks,
     
    A friend of mine is a VP at BA and has been complaining the last couple of years that they can’t get any traction because every month the Feds is suing them for one thing or another.
     
    As for you comment about what’s the point of bailing them out for trillions if you are going to turn around and sue them.
     
    Perhaps it’s just politics and they know something we don’t.  Like for example that there is another bank meltdown on the horizon and what better way to protect their political asses than to get out in front of this thing before it happens.

  3. Savi

    Phil—anything to be done on the tlt trade from yesterday? Sept 107 puts @1.25?
    Thanks

  4. champ87

    Phil
    Looking forward to your advice to modify (or sit tight!) the following which will probably nose-dive early today: GLD Oct 160 Puts, TLT Sept 107 Puts (in view of your above play to short TLT at 111) and QQQ Sept next weekly 56 Calls. Thanks for your guidance!

  5. angelcur

    what no comments on th ejobs disaster?

  6. manitowocdave

    Good Morning Everyone!
    Phil — I am with champ87.  I’m curious about the: QQQ Next week $56 calls at .35 and are you sticking with the Oct 17.00 calls.  I assume there will be a psycho flush down this morning……stick with them or flush, as well.
    Thanks.

  7. stjeanluc

    Oil Lines – Wheeeeeeee edition!
    R3 – 91.34
    R2 – 90.62
    R1 – 89.65
    PP – 88.93
    S1 – 87.96
    S2 – 87.24
    S3 – 86.27 (we are here now!)
    Yesterday’s high and low – 89.90 / 88.21
    Breakout lines – 92.63 / 83.78 

  8. jakester

    Phil- If you are going to have any political credibility with your readers you should be honest  provide them with all the facts. Yesterday you stated many times how terrible it was the republicans would not accept Obama’s request for his speech on Spet. 7th and how this shows great disrespect for Obummer. Not one time did you mention it was Obama (knowing there was a Republican pres debate scheduled for that evening) that was playing politics to take the spotlight away from the Repubs. You claimed to me I was misinformed  (Typical behavior of libs when backed into a corner) because the repubs had changed the date three times already So I checked. The date of the debate was scheduled on May 3rd, 2011 and has been fixed for 8:00pm EST since that time. This is the exact time that Obama requested his speech!  My point is that he has know this all along and again is playing petty politics. He could have easily requested the 8th (the first full day congress was back in session).  This guy is all about political maneuvering. His speech will be a bunch of smoke and mirrors instituting programs that seemingly help Americans while doing nothing but funneling more money to his banker bud’s. So before you and your t "Phil Fanatics fan club" start attacking,  I am not a republican. Just someone that listens to both sides of the bickering rather then just one and I am disgusted by what I see.

  9. manitowocdave

    Phil — I am sorry about leaving out one important detail in my prior post:
    GLL Oct 17.00 calls
    Are you staying with this trade or dropping it?

  10. tyro66

    Phil – Trying to understand the fundamental reasons why you chose the TLT plays yesterday and today for an allocation of assets.  What is it that you expect will drive interest rates up in the near future? Thanks.

  11. Pharmboy

    PP for today!

     

    SPY Chart shows some support at 118.25, but after that it is about 117.50.

  12. Pharmboy

    Another good chart to think about from Cobra.

  13. stjeanluc

    FAS Money Recap
     
    Long Strangle –Jan 12 Puts (3.01 average now 2.60) and 15 Calls (2.75 average cost now 2.42). 
     
    Weekly –1/2 September 15 Puts (1.14 now 2.18)
    Monthly – 1/2 September 15 Puts (1.14 now 2.18) 

  14. angelcur

    phil do you have a fan club?..if jake is right about the name its not a good one…meanwhile rome is on fiwah!

  15. angelcur

    phil do you have a fan club?..if jake is right about the name its not a good one…meanwhile rome is on fiwah!

  16. jerconn

    Phil, is there a downside target for oil?  Those USO puts from a couple days ago are looking good…

  17. Phil

    Good morning!  

    Well, if anyone rode out those futures shorts, they ended up great but a nice head-fake spike the other way is why it’s too gut-wrenching to play – even when you get it right.  Meanwhile, now we have to watch and wait because we don’t want to catch a falling knife but we will be looking for good entry opportunities.  

    Oil is coming down nicely, now $86 so congrats to all the oil shorts!  Yet another example of something that did a stupid, blow-off spike ($89.90 yesterday) before finally heading where it should have in the first place….

    Is that what gold is doing at $1,880?  Hard to say and way too early to roll the Oct puts higher or adjust GLL as they may go to $2,000 first.   Europe is still catastrophic and our technicals are turning very ugly, even if we do hold the top-middle of those W patterns.  

    No time for news as I want to put out some trade ideas while they are hot:  

    On the FAS Money play, we have the short Sept $15 puts, now $2.08 and those would, in theory, be rolled to 2x the $13 puts, now $1.05 but let’s be aggressive and sell the $13 puts first – giving us a full cover – and put a stop on the $15 puts at $2.33 so we risk .25 and, if we keep going lower, we’re back to a 1/2 cover at a lower strike and we can fill that in with the sale of the $13 puts at a higher strike or perhaps the $12 puts.  

    XLF is at $12.72 and, as I said, I think the pros already factored in the bad news so the Oct $12/13 bull call spread at .59, selling the $12 puts for .54 is net .05 on the $1 spread.  

    TLT is coming in right where we expected it and the Sept $112 calls can be sold for $2.05 and that makes the $115/112 bear put spread at $2 net out to a .05 credit on the $3 spread so lets do 5 of those in the $25KP (TOS says margin is $21K) with a stop on 2 of the calls at $2.50.

    The GLD $160 puts fell to .90 and our goal is to roll those up to the Oct $168 puts for $1 (now $2) – never hurts to ask.  

    TNA Sept $41/46 bull call spread is $2.30 and the $37 puts can be sold for $2 for net .30 on the $5 spread.  It’s a 13% drop on TNA, which would be a 4% drop on the RUT to 664, which is about the lows we hit before. 

    Keep in mind we may drop a lot more on Monday if Asia panics so hopefully you have an EDZ hedge – see yesterday’s Chat for the latest – BEFORE you try to go bullish!  

  18. JRW III

    IWM   68.69,  68.97,  69.40,  69.70,  70.14,  70.66,  70.98,  71.33,  71.87,  72.09,  72.69,  and  73.14

    Also there is a strong descending support trend line at 69.16

    I am in TNA for the rebound as "they" will be trying to keep us from falling out of this box:

  19. 1020

    Good Morning!
     
    Labor Sec. Solis on CNBS:  "I believe we have done everything we can" 
     
    Pathetic….

  20. stjeanluc

    FAS Money – We sold the September 13 Puts for 1.03. We now have a stop on the 15 Puts at 2.33.
     
    Long Strangle –Jan 12 Puts (3.01 average now 2.60) and 15 Calls (2.75 average cost now 2.62). 
     
    Weekly –1/2 September 15 Puts (1.14 now 2.11) and 1/2 September 13 Puts (1.03)

    Monthly – 1/2 September 15 Puts (1.14 now 2.11) and 1/2 September 13 Puts (1.03)

  21. lunar

    phil, your help please on rolling some underwater sept options to oct.  what strikes do you recommend ?
    FAS 17 calls (purchased $2.0)
    GLD 173 puts (purchased $2.5)
    thanks.

  22. snow

    Trade idea/Phil – what about USO?

  23. Phil

    BNO/DC – They only produce 500,000 barrels a day and most of it goes to China.  Always keep in mind that oil is fungible – if one country bans it then the producer just sells it to someone else and the highly moral buyer simply buys more oil from one of their other sources.  It’s like you saying you won’t buy Coke at 7-11 anymore but you’ll buy the same amount from the supermarket instead.  While 7-11 may care slightly, it doesn’t bother Coke at all, nor does it in any way affect the supply or demand for Coke.  

    Protection/Exec – That’s a stretch.  Too big to fail is still too big to fail.  This nation of whiners would freak out if the banks failed.  I used to think it wouldn’t matter and we’d adapt and survive but watching the selfish, petty BS in Washington and seeing how much support it gets, even from the fine people in our own chat room has made me think that, within 3 days of the ATM machines going dark, this country will descend into cannibalism….  8-)

    TLT/$25KP, Savi – Yes, roll ‘em up, of course!   In the $25KP, the Sept $107 puts are now .63 and we want to rill those up to the $110 puts (now $1.45) for .85 and DD for 20 at net $1.78, which is .13 over what I predicted at 4pm yesterday!  

  24. jromeha

    Phil- they moved my pre-deployment training from Wyoming to Fort Dix, how far are you from Trenton? Do you have an office or just work from home? Was thinking of making a pilgrimage and visiting the Mecca of PSW if time allowed.

  25. l4real

     Phil, Great trade idea with the TNA BCS and selling the $37 put for protection. Can this concept be used w/ the IWM options that have more liquidity?  Thanks

  26. dclark41

    Thanks Phil. That makes sense. Would you roll BNO today or wait until next week? Even though it is up it has to be up alot more to make up for the initial entry and the fact that it’s very difficult to get the price you want on a sale because it is so thinly traded. Thanks.

  27. angelcur

    speaking of cannibalism…i ownder how teh chinese will make that a profit center..especially with there stockyards…lets not diss this

  28. diamond

    Phil - RE: "within 3 days of the ATM machines going dark, this country will descend into cannibalism."
     
    Dilbert comic strip

  29. tuscadog

    Phil / Bruce Krasting    Everyone should read his article on your site http://www.philstockworld.com/2011/09/01/the-feds-plan-rumors-of-news-2/
    This is almost certainly going to be the stealth QE3, announced by Obama next week.  If I understand correctly 10mm mortgages will have their rates reduced to 4%?  Still don’t understand how they can get away with only doing this for mortgages held by F/F.  Is this equiv to $600B stimulus?
    Gold and bonds say QE3 now certain.
    This unemployment # is going to make it hard for the GOP to block Bama’s proposals next week.  Corker was squirming under attack from Hobbs this morning.  His do nothing solution sounded as pathetic as it is and I think GOP congressmen will have trouble spouting this pathetic strategy on TV.
    From a mkt perspective I kind of think ‘help is on the way’?

  30. ethan2010

    Phil, i have GLD sep16 175Put bought at $2.38 now $1.12. shall i roll? thanks,

  31. exec



    JR/Long
     
    They better pop it soon.  I can’t imagine there’s a lot of traders that are going to want to be long going into the holiday weekend.

  32. stjeanluc

    This looks promising for a crisis resolution in Italy:
    http://tpmdc.talkingpointsmemo.com/2011/09/primeministerfail-berlusconi-calls-italy-a-shty-country-he-plans-to-leave.php
    It’s bad in the US, but Europe is a big basket case now! Greece’s GDP growth was revised down again, the deficit prediction for the year have been matched by 90% after 1 quarter already! The solution to resolve this problem, hike taxes on food and restaurants by 10%. Which businesses already said they won’t enforce! The death spiral is continuing… 

  33. rehat

    Very telling graphic on HP
     
    HP Stock Secret

  34. stjeanluc

    Big government numbers…
    http://www.reuters.com/article/2011/08/30/us-usa-states-employees-idUSTRE77T4A920110830

    According to the Census, local and state governments had 203,321 fewer full-time equivalent employees in 2010 than in 2009 and 27,567 fewer part-time employees. 

    That cannot be helpful!

  35. JRW III

    exec / long

    If "they" can get us over IWM 70.98, I may buy some calls for Tuesday !! (my 3 day weekend rule)

    We’ll have to see how the day goes; things should pick up after 11:30.

    Out of TNA with $ 1.05 on the 8EMA crossover !!

  36. kramer36350

    BANK OF AMERICA: If Things Really Get Bad, We’ll Sort Of Spin Off Some Of Merrill Lynch
     
    In a very unusual move, the Fed asked Bank of America to provide a plan of what it will do if its stock continues to tank.
    Bank of America said it would consider issuing a Merrill Lynch tracking stock, among other options.
    This Fed request came at the end of July, before the latest crisis in Bank of America’s stock. Since then, the stock has plummeted further, and the bank has finally begun to take steps to address the situation, selling preferred stock and options on about 7% of itself to Warren Buffett.
    http://finance.yahoo.com/blogs/daily-ticker/bank-america-things-really-bad-ll-sort-spin-112915592.html

  37. JRW III

    The "beaten down" jobs figures are bad enough, says Tom Porcelli, chief U.S. economist at RBC Capital Markets. But average earnings growth has also "collapsed," which means "we’ve effectively removed one of the key drivers of job growth."

  38. dclark41

    10:32 AM Shares of Staples (STPLS -4.4%) and Officemax (OMX -5.1%) are steep decliners on the negative outlook for employment. In particular, investors may be absorbing the terrible private-sector job number as a bad omen for office supply spending.
     
    From Phil’s Dozen:
    SPLS ($14.48) is back around their 2008 lows ($12.99) and they actually pay a .40 dividend (2.8%) so a nice little stock to own.  They are not in trouble – in fact, they have $1.4Bn in cash against a $10.27Bn market cap and they have earned about $800M a year.  International growth has been strong but the US is where they make the margins and we have been lagging – even without stimulus I’d look for the US to pick up and margins to improve in Europe and Asia.  

    Since you can just sell the 2013 $15 puts for $3.20 and establish a $11.80 entry – I do like that idea!  That would make the .40 dividend 3.4%.  
    The Jan $15 calls are $1.15 and the Oct $14 puts can be sold for .80, which is net .35 on the set.  
    The Jan $12.50/15 bull call spread is $1.45 and 2x can be paired with the sale of the 2013 $15 puts for a net .30 credit so you make $5 at $15 (up 3.6%) in Jan and lower the potential entry to net $9.70 or the worst case is a 1x entry at net $14.70 if they are still under $15 in Jan 2013 (rollable, of course). 

    If you liked it then you will like it more now.
    Staples stock now at: $13.77

  39. kramer36350

    average earnings down, consumer spending up – i guess you have a bit of free cash when you quit paying your mortgage (strategic defaults up).
    next week will certainly be interesting with Obama’s proposal and I see the situation getting desperate enough (‘the people’ are getting tired of everything in washington) so hopefully we won’t have to endure another circus to get a proper solution

  40. seer

    Phil, Tuscadog
    It seems there would be significant technical ldifficulties reducing the rate on those mortgages to 4%.  All the associated MBS securities would be repaid and new ones reissued at lower rates (or the money driven into treasuries).   There are other obvious challenges as well including a significant fiscally prudent percentage of the population that would scream (even though they didn’t scream about banker bailouts).  How do they get this through without significant political damage?  What are the odds these people are going to go out and spend the mortgage savings on goods and services rather than pay down other debt?  How big of a boost to jobs would you get from this versus just spending the money on infrastructure?  Wouldn’t surpirse me if it happened, but it seems there are more effective and certain ways to create jobs.

  41. scottmi

    FTR – 2013 $7.5 buy/writes today are giving entry below $5 (i got $4.91) turning the .75 dividend into a 15% yield

  42. tuscadog

    Phil / ZSL   I guess QE3 now certain will send gold and silver to the moon, so no point holding shorts?

  43. angelcur

     bunds new record low 2.0% dax -4%

  44. Pharmboy

    AZN doesn’t get what it needed….and now Zocor and Lipitor can be generic and reap the rewards.

    Was pitting Crestor against Lipitor worth the risk for AstraZeneca? Ahead of the full results from the Saturn study it is hard to say, but the top line data suggest probably not.

    The miss on the primary endpoint and hit on the important but secondary endpoint mean the study is likely to be benign at best in terms of shifting physicians’ impressions of the drug, which is already widely viewed as the most potent statin on the market. However in terms of establishing a clear difference between the two products, to help Astra justify Crestor’s premium price versus cheap generic Lipitor, the study does not appear particularly helpful. With a full presentation of the study slated for the American Heart Association meeting, the details needs to dazzle.

  45. Phil

    GLD/Champ – As above, TLT as above, QQQ – SCREWED!  Those dropped to .12 and I would DD as that drops the basis to .24, which is very easy to come back to vs. .35 but still a risk with so little time.  

    QQQ/Manitow – If you enter every naked option position with the full intention of doubling down if it drops 50%, you will have a lot more fun playing.  Scaling in is key to long-term success.  Of course we don’t just add to everything that goes against us but, when you have a drop you think is overdone and something that was .35 yesterday falls to .10 at the open – then doesn’t buying 1x more make more sense than taking a .25 loss if you have even a 50% chance that you’ll bounce 50% back?  The key factor is that we have 6 days (since we have all day today) to come back from a 1-hour drop so, unless you think things have gone so bad that there’s no way we come back – rolling down or adding to the position makes sense.  

    Checking/Jake – Where’s the link to that, I’m curious.  Also, you do realize that this is a market blog and you probably couldn’t pick a worse time to start with that nonsense.   More people watched the Jersey Shore than that last debate – get a clue.  As you can see (well not you, you only see what you want to see) – it’s kind of hard to find a day when there isn’t a debate with these media whores.  Also, this is from Politico – the sponsors of the debate:  

    -- "[A]ccording to the White House source, Boehner said “okay” to Daley’s request for the Wednesday evening date. (Asked for comment, Boehner’s press secretary, Brendan Buck, said he had nothing to add to his statement of Wednesday that read in part: “No one in the speaker’s office – not the speaker, not any staff – signed off on the date the White House announced today.”) 

    -- "[W]ho does the White House believe was really behind treating the president so shabbily? ‘At first, I didn’t think it was Boehner, but his caucus,’ the source said. ‘But maybe not. Maybe it is him.’" http://politi.co/rfzVEp  

    GLL/Manitow – Nothing to do with those but wait for now.  Gold could go much higher and, if it comes back, then no big deal.

    TLT/Tyr – Up around $110 on TLT is the point at which short-term rates go negative.  If you don’t know why that would be fundamentally unsustainable, I’ll be happy to talk about it on the weekend.  

    SPY/Pharm – That blue line really needs to hold at 120. 

    $25KP – Sept 30th $116 puts are now $5.20, lets roll those down (all 10) to the $112 puts at $3.30 to take $1.90 off the table (we shorted the Sept regular $115s at $1.80, now $3.80).  

    Fan club/Angel – Not that I know of but feel free to start a chapter.   

    Oil/$25KP, Jerconn – We ended up in the $33 puts at net $1.15 and then spent another .30 to roll to the $34 puts ($1.45) and, if you doubled down they were a 1/2 out even earlier.  Now they are $1.36 and we have 10 at net $1.45 but our plan was to roll to wherever we could into the long weekend and our expectation is we sell off next week.  As long as you have a manageable amount, I think it’s a worthwhile play to stick with. 

    Solis/1020 – Well that’s not very helpful, is it?  

    FAS/Lunar – This is why we roll no later than a 50% loss!  At .15, there’s not much left to roll.  The Oct $17s are .84 so you can spend .70 to roll there and DD at .84 and that’s net $1.77 on 2x but it’s really a new bet at this point and you almost may as well go for the Oct $13/15 bull call spread at .95 as you don’t need such a big move to double up.  GLD, on the other hand, at least you have .77 left so you can sell the $175 puts for $1.10 and roll to the Oct $168 puts at $2 for .13 out of pocket to buy you a month.  If you want to be a bit more bearish, you can make it a 5/4 or 4/3 spread.  See how much better it is to adjust while you still have some money left?  

    Meanwhile, things are still very weak so we’ll have to wait for the EU close at 11:30 to see if we’re going off a cliff or not.  

    USO/Snow – I like those Sept $34 puts, now $1.35 but the Oct $32 puts at $1.50 are smarter for a new entry as you get an extra month to be right.  

    Visiting/Jrom – I’m up by Paterson, about 90 minutes and yes, I work at home so not much of a mecca but we do have some nice sushi restaurants around here.  

    IWM/L4 – You don’t get that kind of crazy premium with IWM but a similar trade would be the Sept $69/71 bull call spread at $1.05, selling the $65 puts for .85 for net .30 on the $2 spread.  That one has 6.4% to fall before the $65 puts go in the money so good to RUT 650 – a little more leeway than the TNA but not quite the reward.  

    BNO/DC – I think waiting for the weekend.  I’d hate to spend money rolling and then have them announce some massive stimulus.  

    LOL Diamond! 

    Rumors/Tusca – Where’s the money going to come from?  They can’t even agree on a time to have a meeting, do you really think Obama will do more than PROPOSE something that sounds good but never happens?  The only thing Obama can hope to accomplish at this point is to make sure the people understand that, if they go to the polls and vote Democrat – then these are the programs they will pass but if they maintain a House majority for Republicans – then the people are, as Corker likes to say "on their own."  This is seriously from today:  

    "The major issue I’m hearing from folks is the amount of regulation they’re dealing with," Corker said. He said the financial, healthcare and manufacturing industries are dealing with a tremendous amounts of regulation which is hampering job growth. "Let’s figure out a way to repeal so many of those problems. The EPA seems to be out of control right now," he said.

    Corker also said he doesn’t anticipate the spending cuts to affect job creation in the area. "Unless we cut spending, most Americans won’t have faith that our country is going to survive," he said. "I think the spending reduction, despite what these economists say, will build confidence in the future."

    GLD/Ethan – At this point you want to buy some time.  The Sept $175 puts are now $1.16 and you can roll them to the Oct $170 puts, now $2.50 for $1.34.  They only have a .06 lower delta so you don’t miss much if gold pulls back sharply and you can sell 1/2 the Sept $174 puts for .98 to knock .46 off your roll cost.  

    Death spiral/StJ – They have to default, I don’t see a choice.  

  46. rainman

    Pharmboy — your post at 11:05 broke IE9.

  47. David Ristau

    If anyone took that SIX short…we are done with it this morning.

  48. BruceE

    I’m loaded up Phil, things look good so far.  I hope you are right about the EU close and I will thank you either way for giving me the courage to take advantage of a day when I would usually be heading for a bar by now.  

  49. champ87

    Phil
    FWIW, I rolled QQQ Sept weekly 56 Calls down to Sept Quarterly 55 Calls for .95. May have thrown good money after bad, but I have some time to learn the lesson.

  50. GSsucks

    Phll – I have AGQ Sept $180 puts that I bought for $4.40 and they’re down to $1 now.  Would you suggest rolling them to October puts, rolling them to a higher Sept value (i.e. Sept $190′s) or DD?  Thanks in advance.

  51. angelcur

    faz, sds, tza and skf all seeing above average volume on low volume market day

  52. Pharmboy

    Buying SPY Sept 120 Call, selling 120 weekly call.  Net debit ~80c.  Will sell on Tuesday or at latest Wednesday.

  53. Pharmboy

    Rain, should be fixed.  Character was added that IE9 did not like.

  54. rustle123

    Hard not to think bullish today when you have a very controlled drop since morning, narrow ranges since, vix only up a point and a half.  Bought some TNA this morning.  Wouldn’t be surprised if we’re down under 100 today.

  55. sampuran7

    JRW
    I recall reading a discussion about your 3 day rule somewhere here on PSW     do you have a link to that discussion?

  56. kurtww

     Anyone else trading futures with TOS? I just tried to execute an order and it got rejected. Support says I have to fund the futures account separately to trade futures (also forex, apparently). "We hope to have the auto sweep feature back in service in the coming weeks." This is supposed to be an improvement how again? In the meantime /cl is up $700 from my buy order. Ugh.

  57. JRW III

    • Average workweek for all employees edged down by 0.1 hour over the month to 34.2 hours. This is a leading indicator, and its discouraging

    While the site was down, I got back into TNA at $ 43.29 off the IWM 69.70 line !!

  58. kurtww

    Even better, if I transfer money into my futures account and drop below $100k in my main account, I will lose PM. Nice…. looks like my IB account will be active for the foreseeable future. 

  59. Pharmboy

    OK, so yesterday I commented back to alik on APRI, today, APRI admits it made misleading statements by citing FDA "approval" for three of its new OTC drugs when it should have said they were "compliant."  BIG difference.

  60. stjeanluc

    This would seem like a good place to start investing:

    A recent study by the Electric Power Research Institute estimates that implementing smart-grid technology nationwide could cost, at the high end, $476 billion over 20 years. (The 2009 stimulus poured $4.5 billion into a handful of smart-grid pilot projects around the country.) Amin, for his part, calculates that doing so would reduce the cost of blackouts by at least $49 billion per year. A smart grid obviously can’t prevent all power outages, especially in a violent hurricane, but it can reduce the damage considerably.

    Invest $24 billion a year for 20 years and save $49 billion every year looks like a 2-bagger to me! 

  61. Phil

    Dollar all the way up to 74.90 on that drop, that’s a lot of rocket fuel to take us higher when they want.  

    Earnings/JRW – That’s not what we saw in yesterday’s productivity numbers.   It’s very dangerous to only look at one set of data without considering how it happened.  There has been no earnings growth because productivity skyrocketed – that trend is ending and it’s very clear that corporations have pushed labor past sustainable limits.  Unless corporations want to stop selling stuff just to prove a point – they will have to begin hiring and bringing capacity back on-line to meet demand and thus begins the virtuous cycle of recovery.  

    SPLS/DC – That’s the point of having a list.  We wait for someone to get cheap and then we can move in.  

    No Circus/Kramer – That’s a funny thing to wish for when you go to visit the big top. 

    Mortgages/Seer – I would hate it if it’s just FRE/FNM as you are randomly giving out stimulus.  No matter how they do it, it will be incredibly difficult to pull off.  For my simple solution, see "How to Solve the Housing Crisis Tomorrow," a version of which I actually gave to Geithner at our meeting.  He said it was not politically feasible at the time.  

    FTR/Scott – Very nice entry.  

    ZSL/Tusca – I like AGQ on the short side still.  The Sept $260/245 bear put spread is $10 and you can sell the $260 calls for $8 for net $2 on the $15 spread that’s 100% in the money.   

    Bunds/Angel – Tragic: 

     Europe closes sharply lower, nearly erasing what had been sizable weekly gains. Stoxx 50 -3.8%, Germany -3.3%, Italy -3.8%, France -3.6%, Spain -3.1%, U.K. -2.4%. For the week, the Stoxx 50+1.3%. The euro -0.4% at $1.4208.

  62. stjeanluc

    More job number analysis:
    http://rortybomb.wordpress.com/2011/09/02/things-im-seeing-in-the-awful-august-job-numbers/
    And to add to a previous post:

    The government continues to drop jobs, shedding around 600,000 since the beginning of the recession. This has become a major disaster that has increased the ranks of the unemployed and put downward pressure on demand at the worst possible time. 

  63. JRW III

    sampuran7 / 3-day weekend rule

    If the last trading day before a 3-day weekend has a dramatic move (usually a trend day) odds are high for follow through on the next trading day !!

    This will probably NOT qualify as we will likely close higher but still red !!

  64. shadowfax

    Some information for those wanting to dump TOS
    I opened an unfunded account with schwab last Friday. Their help is lame except a few, about average for today’s experts. Compared to etrade they answer the phone slower and street smart edge is slower than etrade pro. The good news is they say they will offer trades at $7.99 and JRW says he has no trouble. Second SSEdge is miles more powerful in charting than etrade pro and for day traders they have the tick and a few other tricks. I’m still learning but I am impressed.

  65. angelcur

    china WORST performer of the week!

  66. angelcur

    -3.2%

  67. angelcur

    btu rebounding coal stocks owuld be up big today if not for the market being so crappy..

  68. angelcur

     "Az der bubbe vot geha"

  69. exec

    JR/Bounce
     
    IWM bounced off S1 twice.  Do you have any stats on that type of failed bounce?

  70. Pharmboy

    If the EU closes down 2.5%, I say we will match their woes.

    This weekend for SWW weekly (or a post), I am going to be highlighting some of our past picks for a volatile market, and I am going back to one of our old buddies, BMRN.  If they are not going generic (SNY, PFE, MRK), then the industry is going to orphan and higher margin drugs (cancer).  I thought this year would be the year for M&A, and there have been a few in the beginning (CEPH, GXDX, etc), but there are more coming.  UTHR, SGEN & BMRN are a few of my top picks for this exact purpose.  Pharma needs to do something fast, and LLY is in need, and I still have 4 months (summer is over).

    GERN giving up all  of yesterdays gains.  Too bad.

  71. Phil

    SIX/David – Good exit! 

    Loaded/Bruce – Well I hope you left room to roll in case things get ugly next week!  I am glad to be helping to keep your bar tab down!  8-)

    QQQ/Champ – That’s a good move.  Gives you 3 more weeks to be right.  AAPL $382 was our sell signal on the Nas, let’s hope they can take it back.  

    AGQ/GS – I hope those aren’t the ones we ditched at $10!  AGQ can change VERY fast and there are still 2 weeks left so I’d just DD at $1 or less (.65 was last sale) and see how that goes over the weekend.  The trick to a DD like that is to realize on Monday that if things are getting worse and you can get out for .50, then you are only losing .15 on the new half.  A big mistake people make is they DD and, in this case, reduce the basis to about $2.50 on 2x but then if we recover to $1.50, which is up over 100% on the new batch – you don’t take the profit just because you are not even yet.  

    VIX STILL not moving much at 32.85 – very strange!  

    Volume, by the way, is just 65M on the Dow at noon.  That is even stranger on a down 2% move but it is pre-holiday weekend.  

    SPY/Pharm – I like that!  

    TOS/Kurt – Yes, since their changover, you have to have a separately funded futures account, which is ridiculous for the average investor.  Will probably be that way through September, then back to normal.  

    Smart Grid/StJ – That is a critical item that we need to do and would create tons of high-tech jobs too! 

    At the open: Dow -1.73% to 11295. S&P -1.89% to 1182. Nasdaq -1.76% to 2180.
    Treasurys: 30-year +1.37%. 10-yr +0.4%. 5-yr +0.07%.
    Commodities: Crude -3.15% to $85.97. Gold +2.9% to $1877.75.
    Currencies: Euro -0.22% vs. dollar. Yen -0.19%. Pound -0.06%.

    10:00 AM On the hour: Dow -1.81%. 10-yr +0.4%. Euro -0.22% vs. dollar. Crude -3.4% to $85.75. Gold +2.72% to $1874.45

    11:00 AM On the hour: Dow -1.74%. 10-yr +0.3%. Euro -0.35% vs. dollar. Crude -2.43% to $86.61. Gold +2.72% to $1874.45.

    12:00 PM On the hour: Dow -1.49%. 10-yr +0.32%. Euro -0.38% vs. dollar. Crude -1.72% to $87.25. Gold +2.81% to $1876.15.

    Attitude is everything:  Whether or not economists think the U.S. is in a recession, more than eight in 10 Americans in a new CNN poll think it is, and one-third of those call the situation "serious." With only 34% of Americans approving Obama’s handling of the economy, the pressure will be on the President in his jobs speech next Thursday night

    More doom:  Bullish and mostly right for the last 2 years, The Fly throws in the towel. While Bernanke will do his best to paper things over, "what I do know is the market will most likely be much lower" in 6 months. "The math is simple: reduce 2012 EPS projections (from) $94 to $70, slap a 13 multiple on it," and you have your bottom.

    On the other hand:  Sam Eisenstadt, former research director at Value Line, forecasts an 18% return for the stock market over the next six months – Dow 13,600 and S&P above 1420. While conceding that such a return “sounds too good to be true,” he’s learned from 63 years researching stocks “not to question the numbers [produced by his model] nor attempt to rationalize them.” 

    Brazil’s Q2 GDP rises 0.8%, lower than Q1 of 1.2%, but inline with expectations. The annualized growth rate is 3.1% vs 7.5% in 2010. The central bank surprised markets earlier this week with a 50 basis point rate cut to 12%. EWZ -2.9%.

    Brazilian finmin Mantega hits the wires, fully expecting additional easing by the Fed beginning at its September 20-21 meeting. He warns QE3 will be bad for emerging markets and extend the global currency war. 

    Jim Leaviss updates the post-crisis results of the Iceland (debt repudiation) vs. Irish (piling debt on top of debt) models. While Iceland is the clear winner, Ireland is also beginning to show signs of life, returning to a bit of growth and having one of the world’s best-performing bond markets this summer. - Either way, it shows austerity is NOT the answer! 

    The EU gives the go-ahead for release of the next trancheof bailout loans to Portugal (€11.5B) and Ireland (€5.5B). The cash is coming from the EU and the IMF.

     Campaigning in her home state ahead of Sept. 4 local elections, Angela Merkel gives folks a laugh, calling the euro a very safe currency and more stable than the deutschemark, according to Reuters.

    Fitch Ratings affirms its ratings on Russia at BBB+ with positive outlooks, saying the nation’s move to a more flexible exchange rate regime could "help reduce its relatively high and volatile inflation rate, lower its vulnerability to oil price shocks and improve financial stability." The agency sees Russia’s federal budget deficit improving to 1.2% of GDP for 2011.

    Bond traders show no signs of backing off from "frontrunning" the anticipated shift by the Fed into longer maturities as a quasi-form of QE3 – perhaps even stepping it up a bit.  Yields: 2-year +2 bps, 3-year +3 bps, 7-year -4 bps, 10-year -8 bps, 30-year -11 bps.

     "The front end is inert," says fully-fledged bond bull Bill Gross urging investors further out the yield curve to get ahead of the Fed’s soon-to-be-announced easing. Gross calls it "almost suicidal" for governments to be focusing on debt reduction rather than growth at the current moment.

    Starbucks (SBUX -0.7%) CEO Howard Schultz emails customers, writing he is "deeply disappointed by the pervasive failure of leadership in Washington." Following up on his plea for executives to withhold political donations, he now asks all SBUX customers tojoin him in a national call-in conversation on Sept 6 to support more effective government.

    Civil unrest takes a turn in Greece where cafe owners arerefusing to pay a 1000 basis point hike in the VAT (from 13% to 23%) on food and drink consumed outdoors. Government planners hope to raise €750M in revenue over the next year with the increase.

    Pumpers to the rescue:  Goldman’s Ingrid Chung makes a bull case for Netflix (NFLX -8.8%) in the wake of the Starz news. Her arguments: Starz accounts for only 8% of Netflix viewing; subscriber growth was unaffected by the loss of Sony content; Starz might come back to the table; Netflix has 6 months to find offsetting content; and the valuation is now lower. (previously

    Dendreon (DNDN -4.4%) shares slump after Robert W. Baird cuts its price target to $14 from $20 and lowers its sales forecast for its Provenge prostate cancer drug. Oncologists say they haven’t been reimbursed yet for the drug because of Medicare and regional carrier issues, according to Baird’s research note.

    So that’s where the volume is:  CME Group (CME -1.7%) says daily trading volume soared 46% Y/Y during the volatile month of August, marking an all-time record. Equity index volume averaged a whopping 4.7M contracts per day, an 83% increase Y/Y, while foreign exchange volume jumped 21% and energy volume grew by 8.5%.

    As optical component and subsystem vendor Finisar (FNSR +15.9%) takes off following its strong FQ1 results and FQ2 guidance, smaller rival Oclaro (OCLR +11%) is also moving sharply higher. Competitors JDS Uniphase (JDSU +2.9%) and Opnext (OPXT+2.6%) are posting relatively modest gains

  72. JRW III

    exec / Bounce

    Third time is a charm (if we get one); if we don’t go up, it’s a long way down:

  73. angelcur

    normally msb (magical sloppy buyer)  doesn’t let us close on lows…we normally close up from here but still down meaningfully…but this US bank suit and what is going on in europe is making me think lows will get tested next couple of weeks….im 25% net long…will likely finish 50%.

  74. angelcur

    earthquakes seem to really be intensifying last few months….6.8 hit alaska this morning…god help portland if that fault goes up there.

  75. hemas03

    Phil, really enjoying the site! To prevent too much exposure i like to buy bull put spreads instead of a naked put.  Currently own AAPL SEP $350/320 and was wondering if there are atractive ways to play this spread other than allowing the to expire worthless which is what i have done normally.  I could buy back the short leg now (not greedy) at a nice profit (which would have been the premise of owning the $350 naked put in the first place).  The question then becomes are there other nice plays for the SEP $320 long leg?  Thanks as always for your insight. 

  76. pstas

    Obama Asks EPA to Withdraw Proposed Ozone Rule
    http://online.wsj.com/article/SB10001424053111904716604576546422160891728.html?mod=djemalertNEWS
    Long coal; short solar

  77. Phil

    01:00 PM On the hour: Dow -1.56%. 10-yr +0.35%. Euro -0.4% vs. dollar. Crude -1.84% to $87.14. Gold +2.72% to $1874.55.

    Cause and effect 101:  Ratio of corporate profits to wages is highest since before Great Depression (Politi Fact)

    Corporate suicide (Research Puzzle)

    The Great Bank Robbery (Project-Syndicate)

    Great weekend read:  Bad Economic Mojo: Non-Scenic Route to We’re Going Anyway (London Review of Books)

    Shares of companies considered non-cyclical are outperforming other sectors in the wake of the jobs report fiasco. Dow components Procter & Gamble (PG -0.5%) and Coca-Cola (KO -0.7%) only show a small loss, while J.M. Smucker (SJM +0.2%) and Diamond Foods (DMND +0.1%) are even edging out a small gain. 

    Possibly further disrupting bailout #2 for Greece, sources say the IMF is opposed to the use of any collateral as security for the rescue loans. Yields for one year Greek paper soared more than 1000 bps today to over 72% as the troika reviewing government books suspended its effort and exited the country.

    Should knock copper down to $4 again (/HG, now $4.126):  BHP Billiton (BHP -2.3%lifts the force majeure it had placed on copper concentrate shipments from its Chilean copper mine Escondida – the world’s largest – after invoking the clause on July 27 due to a unionized workers strike. 

    Nomura thinks there could be a slowdown in iPhone (AAPL) sales in September, as buyers wait for the hotly-anticipatednext-gen model, but sees Q4 demand making up for it. The firm also believes Sprint’s (Sacquisition of the iPhone may be a mixed blessing for the carrier, as it could trigger a price war rivals T and VZare better-equipped for. 

    John Tobey speculates on why Apple (AAPL) trades at low multiples, even as it continues to post spectacular growth. His list of possible reasons includes the conservative forecasting approach of analysts; the current risk-aversion of equity investors; and ongoing fears about Apple’s future in the post-Steve Jobs era

    Three lunchtime reads:
    1) Seven high-quality dividend stocks to buy during the next correction
    2) When index funds lose

    3) Three questions on financial stability 

    From Barry:  Some asterisks on this job number, but overall, quite weak, and a continuation of the downtrend for the 4th consecutive month. This was the weakest NFP report in almost a year.

    A Verizon strike is the key asterisk to this report — that shed 45k employed from the overall picture.

    Lets breakdown the August data. The headline number was that job growth was unchanged in August, as was UE, but the details are where are the goodies are found.

    Some specifics:

    • Total nonfarm payroll employment, at 131.1 million, was unchanged (0) in August. Employment changed little in most major private-sector industries.
    • Household survey shows the number of unemployed persons, at 14.0 million, was unchanged from last month;
    • Involuntary part-time workers rose from 8.4 million to 8.8 million in August.
    • 2.6 million persons were marginally attached to the labor force, up from 2.4 million a year earlier;
    • Revisions were negative: June was revised from +46k to +20k; July was revised from +117k to +85k.
    • Over the past 12 months, average hourly earnings have increased by 1.9%, which is soft.
    • Average workweek for all employees edged down by 0.1 hour over the month to 34.2 hours. This is a leading indicator, and its discouraging.
    • Manufacturing workweek was stable at 40.3 hours for the 3rd consecutive month; factory overtime increased by 0.1 hour over the month to 3.2 hours.
    • Average hourly earnings for all employees in August decreased by 3 cents, or 0.1 percent, to $23.09. Also a leading indicator, also discouraging.
    • Temp Employment Help services changed little over the month (+5,000) and has shown little movement on net so far this year. (Also a leading indicator)
    • Sectors showing employment gains: Health care (+30,000), Mining (+6,000), Professional and business services (+8,000). Over the past 12 months, health care employment has grown by 306,000, and since reaching a trough in October 2009, employment in mining has risen by 144,000
    • Information industry (-48,000) Manufacturing (-3,000), Government (-17,000). Construction; trade, transportation, and utilities; financial activities; and leisure and
    hospitality were unchanged
    • * the asterisk: Employment in the information industry declined by 48,000 in August. About 45,000 workers in the telecommunications industry were on strike and thus off company payrolls during the survey reference period.

    Economist Justin Wolfers tweeted “Congress owns this report. But I’m even more worried about the September report. Debt ceiling madness has real consequences.” I am unsure how much the kabuki theater in July and August impacted this report — its more accurate to say that a misguided Congress, along with an inept White House economic team, owns this economy.

  78. Pharmboy

    Lunch back east?  Where have all the people gone?

  79. GSsucks

    AGQ / Phil – No, this is a new batch of AGQ Sept 180 puts.  I loved our AGQ trade in the $25KP so much (had bought the same $180′s for ~$4 and sold them at $8), I pulled the trigger on them again as soon as they dropped to $4.50.  The problem  is that I bought TWENTY (20) of them this time around instead of the 5 we had bought last time.  Hence I’m down about $8K on AGQ right now. 
     
    If anything positive can be extracted from my current situation, it’s that I’m learning to not go "big" into a trade, regardless of how much of a "sure thing" it seems.  I’ve lost so much money in the last three years that I have a tendency to throw everything into any trade that looks promising hoping I can make back my losses faster….like a hitter trying to knock every pitch out of the park to make up for his .180 batting average.  But I’m trying to convince myself that the "new me" knows better than the old me [microwave theory, etc] who kept on doubling up on SRS calls over the last two years until EVERYTHING was gone.  It might be a little late to learn that lesson though as I have excessive positions in BNO (40 puts), AGQ and GLD which are down a combined $20K. 

  80. tuscadog

    Phil / 58% employed!    It’s fallen from 64% in 2007.  Why does anyone (like that fool Corker) expect private enterprise to fix this when it’s cheaper to move manufacturing to China, eg GE?  We need a return to mercantalism to fix trade.  But, in the meantime, we need a massive infrastructure spend financed by Gov’t to put those millions back to work so that they can pay taxes instead of taking handouts and food stamps.  Phil has outlined numerous obvious initiatives which could quickly put millions back to work.  I’m intellectually baffled at the GOP position espoused again by Corker this morning.  Millions are hurting unecessarily.  Obama increasingly looks like a one term wimp, no Rooseveldt nor Trueman.

  81. lunar

    jrw, still thinking we close higher?

  82. gucci

    Hi Phil-- AGNC — when do you think a good time to scale in this stock--after sept 20 fed meeting or next week --thx

  83. JRW III

    Breakfast out West !! 

  84. chasw

    Well done JRW, I needed that laugh

  85. jakester

    Phil/Debates- It really wasn’t difficult. There are many links that go back several months listing a published debate schedule. Below is the first one that came up in a google search of "2011 republican debate schedule"  (with a date associated to it: of Jun. 24th).: Clearly the fricken President  knew there was a televised debate (yes people do watch them) at exactly the time and date he was requesting to make this important JOBS speech.  From your writings it appears you are concerned he’s not getting the respect he deserves as POTUS. Could it be because he continues to play these sleazeball political games???
    BTW, I posted my comments each time before the market opened because I prefer to discuss trading when the market is open but you asked: http://freedomslighthouse.net/2011/06/24/schedule-of-2012-republican-presidential-debates-updated-62411/

  86. JRW III

    lunar / higher

    My chart said sell at 12:25 ; we are now on  the major support line (at IWM 68.93), so we go up or down from here !!

  87. Pharmboy

    That would B .  Just 0.3% or more…

  88. zeroxzero

     Is there any correlation between stock prices and the weather?  Nightime temperatures dropped from 60F to 45F in one week up here in the Rockies.  Should my enthusiasm for buying coal increase?

  89. jcaesar

    Jakester – Ok, what’s more important?  A debate that only you and three other people watch, or the jobs crisis?  What do you think the president is more concerned about right now?  If I were him, or his staff, I think I could be forgiven for being a bit distracted and not noticing that one of the million Republican debates was happening on that date.

  90. Pharmboy

    Possible target, 115 (from Cougar):

  91. mrmocha

    I love (NOT!) those little spikes that go right to your stops, get you out of puts, and then head back down, look at the trick they just played with IWMJabobeast, another potential rant for you!

  92. JRW III

    Given the time of day, this will be the push to try to get us back close to the open; if it fails we will close even lower and I will hold a partial TZA position over the weekend !! I’m in cash now, waiting !!

  93. l4real

     JRW, Where R U eating?

  94. Pharmboy

    Going to start accumulating GG puts (52.5).  They have hit $55 several times and if they remain there, a shooting star in the the works.  Need to finish in the lower half of the formation, so below 54.40 for me (high was 55.05).

  95. jakester

    jcaesarr/debate- That makes perfect sense…to you in your single perspective world. However, if the shoe were on the other foot and this was a democratic debate you would be outraged.  I’m just disgusted by the whole thing and ALWAYS question the motives of either of these two perties.  I was simply pointing out the obvious dirty politics continue in Washington and it is not only the sleazy repubs as PSW would like us to believe.

  96. stjeanluc

    To follow up on an earlier post about global PMI:
    http://blogs.wsj.com/economics/2011/09/01/world-wide-factory-activity-by-country-17/tab/interactive/
    It’s not looking good at all! Half the countries are contracting and some pretty badly!

  97. zeroxzero

     Yeah, Angel, Europe’s balance act may be tipping.  There’s no way the peripherals can live with 1.40+ unless Germany throws its wallet on the table, which is not looking popular among German voters right now.

  98. Phil

    Lows/Angel – I hope not, will be tough to recover from – as would an earthquake that hits the continental US.  

    AAPL/Hemas – Thanks!  So you bought the $320 puts and sold the $350 puts?  I’m not a huge fan of those but you only lose if AAPL falls below $350 and that doesn’t seem terribly likely at $375.  The $320 puts are .73 now and the $350 puts are $2.50 and you are risking $30 to make $1.80 – certainly not a trade I’d be comfortable with on the whole.  If your intention is to do it again in October, you could go with 2x the Oct $350 puts at $9.80, selling 1x the Oct $375 puts for $18.80 so you eliminate the possibility of a loss on the Sept $350 putter (as it’s covered by the open Oct $350 puts) but you still risk a $25 loss (better than $30!) if AAPL falls to $350 and anything below $375 is trouble.  If, on the other hand, they break back up, you can stop out 1/2 your Oct $350 puts and then you are in your next spread.  

    YRCW not going down today!

    Ozone Rule/Pstas – That’s a surprise but I guess the complaints that companies can’t afford it is working at the moment.  

    AGQ/GS – You have to be aware of the timing on those trades.  With half as much time left as our first entry, $4.50 was no longer an attractive price for something so far out of the money and, of course, shameful greed and lack of stops took care of the rest.  Notice you are not diversified either – all commodity shorts, which are very dangerous with QE3 approaching.  We were taking commodity shorts to offset longs like the Sept Dozen so, if there is no QE3, then we have a good hedge.  As a main bet – those are downright scary!  Also, any unhedged, directional bet with more than fun money is TOO MUCH!!!

     Anyway, with AGQ $180 puts, now $1 again, as I said, the best thing was/is to DD as it’s only $2K more and now you are in 40 for $11,000 or $2.75 each.  Since those puts were $3.50 on Tuesday and since there are 9 trading days left – it’s not unreasonable to think they can come back.  Also though, always assume that the best you will get is a 50% comeback so a $2.50 drop to $1 means if you get to $2.25 you should be THRILLED to get out.  Imagine how much simpler it would have been if you had just taken a 20% loss at $3.50 and waited for a better opportunity to enter or scale in – like today…

    Wimp/Tusca – Yes, very disappointing and will be a total disaster if the Dems get tossed out and America heads down the no taxes and austerity path.  

    AGNC/Gucci – I think $27.50 is a fine price for them long-term.  You can sell 2013 $25 puts for $5 now and that’s 25% back on your potential net $20 investment and about 200% back on margin.  That makes a nice, initial entry.  

    Again Jakester, you ignore the actual fact that this debate had been agreed upon by Boehner before the Reps decided they could score points by driving their drooling followers into a beserk frenzy over this ridiculous non-issue:  

     

    But there’s another wrinkle here. Sam Stein at theHuffington Post tweeted that Obama had already cleared the Sept 07 date with Boehner’s team privately before the scheduling of the debate. The reason they were able to do that is because next Wednesday’s debate had been subjected to re-schedule more than once.

       Whether Boehner’s office will admit that, or whether the White House will come out and refute Stein’s claim --don’t hold your breath. But if Obama comes out and says, "Hey, Mr. Boehner and I had an agreement on that date, and then suddenly…" Well, then what?

    But there’s also this question: What’s more important, the problems the president will address or another of what will be a long line of Republican debates? Few of these debates really matter since most of those candidates don’t even have a shot at getting a hall pass, let alone the nomination. If Boehner was about anything, shouldn’t it be, "Let’s see what we can do about our debate, rather than the president moving the date for a speech on a vitally important matter to the nation."? The GOP candidates can’t do anything about the economy (even though two of them are members of Congress).

       It’s worth asking that question since next Wednesday’s debate was originally slated to take place on May 02, but was postponed when it became clear the candidate field was taking shape more slowly than anticipated. The debate was moved then to Sept 14. However, that date put it just two days after the CNN/Tea Party Express debate. So the debate can be moved for the Tea Party event but not for the president’s speech?

     

    Anyway, back to the markets:  

    Let’s not forget about our Long Put ideas.  The theory is that – IF the market is collapsing, these stocks would eventually get dragged down with the rest but, if we move up, as they are near enough the top of their ranges, we should be able to exit the puts reasonably a lot of them are in much better shape than when we first looked on Aug 23rd so here’s the updated list (the "was" number is their crash lows): 

     

    • AXP (was $12, now $48) Jan $35 puts are $1. 
    • BIDU we already did (was $11, now $139) Jan $61 puts are $1
    • CAT (was $24, now $86) Jan $62.50 puts are $2.30
    • CMG (was $40, now $307) Dec $200 puts are $3
    • DECK (was $15, now $86) March $50 puts are $2.30
    • FCX (who I like LONG, was $9, now $45) Jan $37.50 puts are $2.40 
    • GOOG (was $250, now $522) Jan $300 puts are $2
    • IBM (was $70, now $167) Jan $110 puts are $1.05
    • ISRG (was $80, now $372) Jan $200 puts are $2
    • KO  (was $40, now $70) Jan $60 puts are $1.12
    • MA (was $120, now $322) Jan $160 puts are $2
    • MMM (was $42, now $77) Jan $55 puts are .85
    • NFLX (was new, now $211) Jan $120 puts are $3.95
    • PCLN (was $150, then $30, now $525) Jan $300 puts are $5 (bonus on PCLN is they also make good terrorism protection)
    • QQQ (was $26, now $53) Jan $45 puts are $1.45
    • V (was $42, now $85) Jan $65 puts are $2
    • WYNN (was $20, now $147) Jan $95 puts are $2.75 (also good against terrorism)

    We have much better strikes and prices now as the VIX is lower but keep in mind these are INSURANCE trades we EXPECT TO LOSE!  The idea is to pick 2 or 3 that offset whatever sectors you are weighted to and PLEASE keep in mind that our goal is to LOSE this money.  When they are down 50% we assume the market is recovering and we we don’t need them anymore, which is why it’s so great if you have the opportunity to take quick 25% gains off the table and switch horses to one that hasn’t moved yet when possible.  

  99. Pharmboy

    Yes, austerity!

  100. stjeanluc

    FAS Money – That spiked down triggered our 2.32 stop on the 15 Puts! We sold them for 1.14 and bought them back for 2.32!
     

    Long Strangle –Jan 12 Puts (3.01 average now 2.76) and 15 Calls (2.75 average cost now 2.40). 
     
    Weekly –1/2 September 13 Puts (1.03 now 1.21)
    Monthly – 1/2 September 13 Puts (1.03 now 1.21)

  101. Phil

     Bonds/Angel – Yes, we’ll have to take this seriously folks, it’s starting to look like 2008 again in Europe, if not here.  

    Austerity/Pharm – But you see, by cutting back all those Government jobs and reducing spending, they have now allowed the "job creators" to work their magic.  And ———— here it is….   OK, wait…….  Right about ——— NOW!……….  OK, not then but maybe…………. now?  No?  Well I’m sure any moment now the mighty Job Creators will reward us with good careers for everyone (why does this sound like a religious belief and not at all an economic policy?).

    Now we’re catching up to Europe’s 3% drop.  Transports and RUT already past it.  

    TBT making new lows now, TLT at $112.22 and that’s a new high – total panic!  

    FAS Money/StJ – So we took in $1.14, then paid $2.32 (net $1.18) and sold $1.03 (net -.15) so the question is do we risk selling another round of $13 puts for $1.21 or go for the short $12 puts at .82.  As we bottomed out at $11.50 a couple of weeks ago but I think $13 will hold and we can sell the next weekly $13 puts for .80 and, of course, we can always roll those to the Sept $12 puts so let’s go for that and sell the 1/2 next weekly $13 puts for .80 (net .65) and hope things turn up.  

  102. Ottomatic

    CNBC just cleared up why so many people are unemployed: gov unemployment benefits are just too extravagant  leaving the unemployed wallowing in excess wealth when they could get a job at McD’s for min wage.  Lucky Duckies!

  103. Pharmboy

    OK, with that spike down, the other 1/2 of my SPY play for the weekend is in.  SPY 116 Ps buy, sell 116 weeklies for 1.15 debit or better.

  104. Jbur

    Phil/All: I finally got out of the last of my TBT junk today. Yes I finally capitulated… and I have to say, I’ve never worked so hard, rolling, rolling, strangling…. for the past 18 months to lose 100K. If I had just been a "sucker" and bought a few puts I would have been whole.  I’m relieved to be out of it… but I am pissed I ever got involved

  105. oncmed

     Phil,
    What is your opinion on the Ags? MON and MOS have really come down and I would like to open a position on MON with selling the Sep 62.50@1
    TIA

  106. Pharmboy

    Jbur – I feel your pain, and will never, ever buy TBT, or an option on it.  We are Japan, we just need to look ourselves in the mirror and realize it.

  107. angelcur

    yes also th ebarclays us aggregaTE BOND INDEX POSTED A NEGATIVE EXCESS RETURN OF 111 BPS IN AUGUST A -3 STD DEV EVENT ..ONLY HAPPENED 3 OTHER TIMES  BETWEEN SEPT AND NOVEMEBER…IF WE ARE GIONG INTO ANOTHER SUCH PERIOD THIS OUTPERFORMANCE SHOULD BE EXPECTED TO CONTINUE…MBS IS STARTING TO LOOK INTERESTING IF WE DONT MELT DOWN…

  108. stjeanluc

    FAS Money – OK, selling next week’s $13 puts for 0.80. 
     
    Long Strangle –Jan 12 Puts (3.01 average now 2.81) and 15 Calls (2.75 average cost now 2.40). 
     
    Weekly –1/2 September 13 Puts (1.03 now 1.22) and 1/2 weekly 13 Puts (0.80)
    Monthly – 1/2 September 13 Puts (1.03 now 1.22) and 1/2 weekly 13 Puts (0.80)

  109. painman

    Phil,
    I have 15 Sept 108.75 puts that are down about 50%. Any help would be appreciated. Thanks for past help in saving my can.

  110. sank1

     GLD / Phil,
    Discussion from yesterday: GLD/Sank – The ones from the $25KP? We rolled those on the 26th and on Monday they popped to $5 so back to down to just 10 open then and if you didn’t stop out the rest on the way back down to $1.83, at this point I’d spend $1.10 to roll up to the $176 puts (now $2.94) and hold them for the weekend as there’s still 2 weeks left.  The next move would be selling a call and rolling to a spread.
    Carried out this roll yesterday. The Sep 176 Puts are now at $1.35. Any thoughts on the action to be taken?

  111. JRW III

    Last support for today !! (SPX 1171)

  112. Savi

    Phil—just closed my short /HG trade for a decent profit—every dime helps
    thanks

  113. Phil

    CNBC/Otto – Yeah, they’ve been banging that drum all week.  Why won’t people who lost a $50,000 job who have $2,500 in monthly expenses take the first minimum wage job they find so they can be at work while they go bankrupt?  That damn government!  It’s also their own damned fault for living that extravagant $30,000 lifestyle, I’m sure…

    TBT/JBur – Definitely the most annoying trade ever (well, since SRS).  This is a 2008-style panic so there’s no logic to the market at the moment – people are acting purely out of fear.  Even in 2009, TLT never went over 100 and 123 was the very top in 2008 but it gapped up to there from $112 in Dec and held it for 2 weeks and fell back to 105 in Jan.  So we are now as crazy on treasuries as when the IBanks were ACTUALLY collapsing, not rumored to collapse.  It’s all a matter of timing but, if this round fails (shorting at $111) then I still feel like a reload at $121 and $131 if they want to do it is still a good play but for TLT shorts, not TBT longs.  

    Ags/Oncmed – They are a good inflation hedge but they died with the rest in 2008 as well.  MON would be my choice as well,  as they are a nice long-term hold for global growth.  

    That’s a big IF, Angel!  

    Mystery puts/Pain – OK, you got me on that one – I give up?  

    GLD/Sank – Have to wait and see if weekend is better or worse.  Too expensive to guess. 

    Dollar back to 74.82, Euro failing $1.42.

    Still no volume, Dow 99M at 2:55.  

  114. tuscadog

    Phil / Gold   Mkt (unemployment is assuming Ddip.  Operation twist is being assumed by Treasuries.  I don’t see inflation accelerating with 22% unemployment, so why is gold exploding?  If Europe tips over it’s extremely deflationary?

  115. angelcur

    right that was my point…along with urging poeple to stay the hell out of short bonds for three friggin months…you didn’t like my yiddish earlier?

  116. angelcur

    (and don’t mention anything about my cmg short and your admonition)

  117. Pharmboy

    B’c gold is it’s own currency, tusca, and the rich, er, mainstreet wants something they can put their money in.  Which will be wiped out eventually as well.  Silver is the poor mans gold, and look at it!  Up 4.X% vs golds 3!

  118. Phil

    03:02 PM The yield on the 10 year Treasury note dips below 2%. 

    The upcoming week promises plenty of Greek drama: workers will be protesting on Saturday; EU finmins will meet on Tuesday to discuss bailout collateral provisions; a German court will rule on Wednesday on a suit against the bailout; GDP numbers arrive on Thursday; and PM George Panadreou will give important speeches both tomorrow and 7 days later. 

    As U.K. banks step up their lobbying against financial reform, the BoE’s Paul Fisher finds they haven’t yet gotten the memo. "Some banks have told us that they think they should not be required to hold capital and liquidity to deal with extreme tail events – leaving the public sector to be the capital provider of last resort." (pdf

    Disagreeing with John Carney and Harvard economist Kenneth Rogoff, Joe Weisenthal doesn’t think it’s possible for the U.S. to inflate its way out of its huge private-sector debt burdens. As evidence, Weisenthal points to how QE2 only produced the type of inflation that makes debt repayment harder, with commodity prices surging and wages flatlining.

    Execs at two staffing firms remain moderately optimisticafter today’s weak jobs data. Adecco SA’s Tig Gilliam doesn’t see signs of a new recession, asserting companies aren’t letting temp workers go as they did before. SFN Group’s Roy Krause is more guarded, claiming business remains positive. but employers won’t commit on a permanent basis. 

    FHFA lawsuits against big banks mitigates against any mortgage settlement from happening, Felix Salmon writes. The banks won’t agree to anything unless they get immunity from securitization-related suits, and the government – a plaintiff in many of those suits – likely won’t give it to them. So "expect this saga to drag on indefinitely." 

    The largest mortgage servicers apparently continue tofabricate documents for use in foreclosures. Dozens of documents reviewed by American Banker show that as recently as August some of the big banks, including Bank of America (BAC), Wells Fargo (WFC) and Ally Financial, were essentially backdating paperwork necessary to support their right to foreclose.

    Having bought $4.3B of it shares through July, JPMorgan (JPM -4.2%) finds itself about $600M in the hole (before today’s slide). It highlights the dubious benefit of buybacks – which put management in charge of the best time to buy – as opposed to dividends which let the investor choose. If a recession hits, JPM may wish it still had that capital.

  119. JRW III

    Watch for the EMA cross (now at IWM 68.23) on the bounce from support !! In other words, we may have a reversal here !!

  120. Pharmboy

    Have a nice weekend all!  I am DONE!

  121. angelcur

     im not sure if it is bad or good that volume light today

  122. angelcur

    jrw are you in colorado or wyoming..those napkins look familiar….

  123. mrmocha

    JRW, should be a nice stick for you now, I’m loaded up with protective puts for the weekend!

  124. cwan120

    Hi, Phil,
    I sold GS Sep $120 puts to finance some disaster hedges.  At the time GS was $135-ish.  The hedges worked out, and I cashed them out.  And then, I was out of town for a few days.  Just came back today.  And now find GS down that much.
     
    What do you think?  Can you suggest any adjustments?

  125. angelcur

    mrmocha you say stick more than anyone in th esites history…;)

  126. flipspiceland

    "FHFA lawsuits against big banks mitigates against any mortgage settlement from happening, Felix Salmon writes. The banks won’t agree to anything unless they get immunity from securitization-related suits, and the government – a plaintiff in many of those suits – likely won’t give it to them. So "expect this saga to drag on indefinitely."
    You mean only the attorneys are going to cash in? 
    I’m whelmed. 

  127. JRW III

    Out of TZA at $ 48.09 for $ 1.29 !! As I said, "reversal" !!  8-)

  128. angelcur

    i can’t wait for someone to show up at our farm and want to buy potatoes or berries for a gold bar….

  129. vic55

    Pharm,
    Are you going trading FXE? Next resistance for $DXY 75.4, could go all the way to 80

  130. zeroxzero

     Tusca:  In answer to your question on gold, I noticed this today, fwiw, from insidefutures.com.  I’d be interested in anyone’s take on this.
     
    "This year’s historic price advance for gold futures is providing a very clear signal that there will not be a double dip recession this year or over the next few years. In the 2008 recession, the price of gold fell approximately 35% on the belief that the world’s major central banks would not be able to re-inflate their economies anytime soon and there would be a deflation problem. This, in fact, proved to be the case. However, in the current period of economic weakness, the price of gold is making all time highs, which at first glance, appears illogical. Our analysis is telling us these historic gains in the gold market, that we are seeing now, is because the world’s major central banks will be successful in their efforts to re-inflate and that there will not be a prolonged downturn in the global economy."

  131. tuscadog

    Phil / Europe   So is today all about Europe?  We decided at the beginning of the week that all the data points w/be crap this week, so ensuring QE3 (and maybe some fiscal push re-enforcement).   Are you suggesting disaster hedges into the weekend on Europe risk, or wait until Tuesday for more fix news and bounce?

  132. Savi

    JRW--what is your position going into the 3 day weekend? TZA or TNA
    Thanks very much

  133. JRW III

    angelcur / napkin

    I‘m in the San Juans !!

     

    Mr. M ? Stick

    Savi / Weekend

    See my 13:39 post !!

  134. Phil

    This reminds me of something Mark Twain said:

    September is one of the peculiarly dangerous months to speculate in stocks. Others are July, January, April, October, November, May, March, June, December, August and February. ..

    Copper/Savi – Nice but I think that mayb be the gift that keeps on giving if we stay weak.

    Gold/Tusca – It’s not about inflation it’s about fear of a collapsing Euro and Asians tend to panic into gold too as their currencies used to be unreliable.  If something doesn’t calm people down over the weekend – this stuff could get very ugly.  

    Yiddish/Angel – I missed it, not something I’m usually looking for on a busy day…

    Reversal/JRW – Good call – the volume is sure low enough to flip it.  They might not want to reverse us though as that would let Asia and the EU buy our stocks cheap on Monday.  On the other hand, if they leave us dead, they might spark panic selling in Asia and Europe to give us a gap down on Tuesday and THEN, when they have flushed everyone out of the markets, they can BUYBUYBUY.  The big flaw in that plan is it’s too dangerous and they may start a sell-off that can’t be stopped.  I don’t think anyone wants that.  

    Done/Pharm – Good plan – have a nice weekend!

    Volume/Angel – Good because there’s no conviction to the move.  

    GS/Cwan – That’s an expensive trip!  If you can roll to 2x the $120 puts ($14.50), I’d do that as an even roll and that sets you up for a roll to the Oct $115 puts (now $13.10), which is a very reasonable price for GS.  If you need to cut margin, you can buy some Dec $70 puts for $2.25.  If they get worse, you will have to sell 1/2 Oct calls but the $110 calls are $6 and $3 would push the short puts down another $5 to $110 puts so that’s the path to work out of it.  

    Whelmed/Flips – Yes, quite.  

    Disaster hedges/Tusca – Well yes, at least a more neutral stance into the weekend in case Europe blows up.  I don’t THINK it will but I didn’t think they would let things go this far in the first place without properly dealing with their problems.  EDZ still my favorite as the BRICs have miles to fall. 

  135. Savi

    JRW--thanks—was not sure if you got out of all your TZA

  136. celesteschein

    JRW-Classic photo of Mr. Stick!  LOL!

  137. JRW III

    Target IWM 68.80 or better; that strong trend line is now RESISTANCE !!

  138. zeroxzero

     My BTU calls are moving up.

  139. scottmi

    Gold/zxz – inflating currencies is happening and seen going on all around. this is big part of move to gold. even the swiss were saying they are going to do some monetary easing.   separately, "re-inflating" prices is not any kind of causal link indicating success at fighting an economic downturn.   sounds to me like insidefutures.com is giving air time to economorons. imho.

  140. scottmi

    JRW – i live in the san juans. heading to friday harbor yacht club for dinner tonight. ping me at scottmi @ gmail.com  if care to join for a drink

  141. Pharmboy

    FXE – no, must play them at 145 or up from 139ish.  So, wait and see if they break resistance or stay in the zone. I only have SPY puts covered and the ones I mentioned earlier today on SPY, kinda like the FAS play, but more mellow.  OK, now I am outta here.  JR, have fun, in So. Cal the weekend is supposed to be spectacular.  1020 can 2nd that!

  142. JRW III

    A great list of impediments to trading success:

    Over-trading
    Greed
    Not following my system
    No System
    Too tight Stops
    Too emotional
    Not Paying Attention
    No goal
    Lack of Plan
    No analysis of Mistakes
    Preconceived Ideas
     

  143. Pharmboy

    Lastly, the GG trade is OFF.  Not going to hold in the lower band of the star.

  144. jromeha

    JRW – San Juans eh? AWESOME. Im from Mount Vernon, Wa….Wishing I was in the San Juans right now!

  145. flipspiceland

    @jrw III
    Have you considered (you must have) offering an on line training seminar separate from this site to teach your system in exquisite detail?

  146. JRW III

    scottmi / drink

    Damn, I was anchored at Sucia yesterday; we’re at Salt Spring Island now !!

  147. Phil

    Good list JRW.

    Very lame excuse for a stick but better than going half a point the other way into the close.  

    A very disappointing week as we were off to such a good start.  

    Finishing down about 2.5% across the board is not a good sign on the whole but it’s all about what happens in Europe over the next 3 days.  

    Have a nice holiday,

    - Phil

  148. stjeanluc

    Good list JRW, but the Too tight stop is debatable!
     
    In any case, have a good weekend everybody! 

  149. scottmi

    JRW – cheers and good sailing too you. weather is set for a good weekend! enjoy that saturday market at Ganges!

  150. JRW III

    Flips / New site

    Why would I go to all that hassle when I can teach right here AND contribute to Phil’s retirement !!  8-)

  151. angelcur

    too busy/ yiddish good thing your not trading diamonds!..i should have made the comment a cut on liberals and you would been kerfuffled

  152. angelcur

    its beautiful there jrw…just dreamy

  153. zeroxzero

    UBS believes that the Portuguese government has decided to auction off 20% EDP, the Portuguese utility.  Since EDP is heavily indebted and pays 8%, whereas other large Euro utilities finance at lower rates — E.ON pays 2% on a similar maturity — the EDP stake should sell at a premium from recent market.
     
    This is interesting from the broader perspective of how Euro goverments handle their fiscal problems.  I wrote recently about "the selling of Europe and the U.S." through currency depreciation which can amortize public and private debts through asset and share sales.  I would expect the "government selloff of assets" to become a trend in Europe going forward.

  154. angelcur

    The Italy sovereign cds is making a new closing record high today. The Eurozone Financial Sector CDS Index is back near its all-time high. The Citi Eurozone Economic Surprise Index has plunged -108.4 points in about 3 weeks to -102.30. The UBS-Bloomberg Ag Spot Index is still near its recent record high, gaining today despite equity losses. The ongoing breakdown in the yield curve, to March 09 levels, is also a large negative.

  155. angelcur

    And for those who have far less than the 30k wage earner this week truly sucked: Rice is making another new multi-year high today, gaining 1.45%, and has risen +36.0% in about 8 weeks.

  156. angelcur

    the worlds poor are crying tonight and we should shed a teat for them..its an unconcionable plight brought to the world by men who couldnt give a rat’s ass…SHAME!

  157. Phil

    Diamonds/Angel – Now THAT is a crooked market!  This rice thing is a catastrophe (again) – these people simply can’t afford to eat and it’s Billions of people who live on rice every day and spend over 50% of their income on food.  

    Asset sales/ZZ – Just another way the top 1% wrests away the people’s assets.  

    At the close: Dow -2.2% to 11240. S&P -2.53% to 1174. Nasdaq -2.31% to 2168.
    Treasurys: 30-year +1.97%. 10-yr +0.51%. 5-yr -0.47%.
    Commodities: Crude -2.3% to $86.73. Gold +3.14% to $1882.15.
    Currencies: Euro -0.47% vs. dollar. Yen -0.15%. Pound -0.23%.

    Market recap: Investors bailed out of stocks ahead of the long weekend, spooked by the no-new-jobs reportCries for QE3mount, but no risk-on trade ever took root. Banks were hit hard on news of FHFA suits over mortgage fraud. And Europe continues topercolate. Gold surged nearly $50, and Treasury yields plunged to historic closing lows. Only seven S&P stocks posted gains.

    New records are set in the Treasury bond market: 10-year yield settles at a record low close of 1.996%, 5-year sees record low close of 0.87%.

    Comex gold soared nearly $50, or 2.6%, to $1,877.20/oz., capping a 10% gain for the week. Silver jumped 3.8% to $43.12 an ounce, gaining 5.2% on the week. On the opposite end, New York crude tumbled 2.9% to $86.33/barrel, and nat gas fell 4.7% to $3.86/MMBtu.

    After growing just 0.2% in July, property prices in China’s major cities declined 0.4% in August, according to the China Index Academy. This represents the first M/M decline since Sep. 2010, asgovernment efforts to cool off the housing market yield results. Nonetheless, average prices in China’s top-10 cities remain nearly on par with those of Los Angeles.

    Nassim "Black Swan" Taleb estimates $2.2T has been transferred from U.S. taxpayers to banks in the last 5 years, and $5T could be transferred over the coming decade. Nonetheless, Taleb doesn’t believe "regulation is a panacea for this state of affairs," given the ability of bankers to stay a step ahead via complex products and derivatives. (previously)

    And here they are:  

    • The FHFA launches its lawsuits. First, according to Reuters, is Barclays (BCS -7.6%), sued over losses on $4.9B of MBS sold to Fannie and Freddie during the housing boom.
    • More FHFA suits: Nomura (NMR -2.9%) is sued over losses on $2B of MBS, reports Reuters, with Citibank (C -5.3%) suedover losses on $3.5B of MBS. (previous
    • More FHFA suits: Bank of America Merrill Lynch (BAC) issued for losses on $30.85B of MBS. (previous)
    • More FHFA suits: JPMorgan (JPM) for losses on $33B in MBS, Deutsche Bank (DB) for losses on $14.2B in MBS, HSBC (HBC) for losses on $6.2B of MBS, and First Horizon (FHN) for losses on $833M of MBS. (previous
    • More FHFA suits: Goldman Sachs (GS) is sued for losses on $11.1B of MBS. (previous)
    • In total, the FHFA has launched 17 suits against major banks that sold nearly $100B in MBS to the GSEs. At the moment, Fannie and Freddie are claiming about $33B in losses from this paper. (PR) (individual filings) (previous

    Media stocks slid a day after the Newspaper Association of America said ad spending fell 7% in Q2. Spending on print ads declined for the 20th straight quarter, dropping almost 9%. Online ad spending rose for the sixth straight quarter, but still totals less than one-sixth print’s total. GCI -6.8%NYT -5.3%MNI -3.2%MEG -1.9%.

    In-Stat sees spending on 4G (LTE) radio-access gear rising at a 41% annual clip from 2011 to 2015, as surging data traffic drives carrier upgrades. Ericsson (ERIC) and Alcatel-Lucent (ALU) are expected to benefit, due to leading positions in the LTE base station and router/gateway markets. Cisco (CSCO) is also expected to be a leader in router/gateway sales.

    Dish Network (DISH -2.4%) bounces off lows on reports that the company plans to launch a Blockbuster streaming service similar to rival Netflix (NFLX -8.3%), the timing designed to coincide with upcoming Netflix price hikes. The offering may include movies from Starz (LSTZA -1.5%), which halted negotiations with Netflix to renew its online viewing deal. 

    Quick Republicans – stop this madness!  First Solar (FSLR) has received $455.7M in loan guarantees from the U.S. Export-Import Bank to build two Canadian solar plants. The move is part of a political effort to increase U.S. solar exports, which rose 83% Y/Y in 2010. In June, First Solar announced $4.5B in DOE loan guarantees for three California projects.

    Google (GOOG) makes plenty of acquisitions in a year, and while some succeed, it’s clear others don’t. A week after its $200M acquisition of Slide officially became a bust, Google is shutting down its Aardvark Q&A service, which it bought for $50M last year. The company has also shuttered its PowerMeter and Google Health projects this year.

    Mortgage REITs American Capital Agency (AGNC), Hatteras Financial (HTS), and Capstone Mortgage (CMO) have moved lower since the SEC announced on Wednesday it will seek comment on removing tax and leverage exemptionsCiti is doubtful the SEC will remove them, but cautions dividends would plunge if they do.

    James Murdoch – son of News Corp. (NWS) chief Rupert and head of its European operations - turns down his $6M bonus. "While the financial and operating performance metrics on which the bonus decision was based are not associated with (the phone hacking scandal), I feel that declining the bonus is the right thing to do."

  158. zeroxzero

     Who says money doesn’t buy happiness?  All surveys placed U.S. average income  between 4th and 6th, after such powerhouses as Luxembourg, Bermuda, Norway, Equatorial Guinea and Qatar.  No wonder Americans are so cheerful and optimistic about the future compared with other, poorer countries.  I suppose its the comfort of knowing you can live off your fat reserves for a few years if the world economy goes Pete Tong.
     

    THURSDAY, Sept. 1 (HealthDay News) — About half of Americans will experience some form of mental health problem at some point in their life, a new government report warns, and more must be done to help them.
    Mental health issues run the gamut from depression to post-traumatic stress disorder to suicide, and many of those suffering presently do not get help, experts say.
    The new report, from the U.S. Centers for Disease Control and Prevention, tallied the national burden of mental illness based on country-wide surveys.
    There are "unacceptably high levels of mental illness in the United States," said Ileana Arias, principal deputy director of the CDC. "Essentially, about 25 percent of adult Americans reported having a mental illness in the previous year. In addition to the high level, we were surprised by the cost associated with that — we estimated about $300 billion in 2002."
    The high cost includes care for the illness and lost productivity, Arias said.
    It isn’t clear why so many Americans suffer from mental illness, Arias added. "This is an issue that needs to be addressed," she said."
     
     

  159. ilene

    Today’s levels.

  160. ilene

  161. elliotteldrich

     I just posted a graphic I came up with showing our current asset allocation, wanted to see what everyone thinks of it. There’s a whole series of gauges and indicators that could be done.

  162. Phil

    Very nice Elliott – I think that’s perfect!  

  163. mrmocha

    JRW, nice choice, I’m a Seattleite and looking at the weather chart (and the window) it looks like sunny sailing this weekend.  I’ll be on the Sound as well, I’ll wave going by…

  164. mrmocha

    angelcur / ‘stick’ – Doesn’t seem likely that I get top honors, I only post a few times a week.  But years ago Phil told me that I have a knack for calling the turns, because usually when I buy or sell something it immediately turns the other way, so I post when I feel that I’ve made just such a call.  Just trying to help.

  165. elliotteldrich

     Thank you, Phil! I’d like to see what ideas our members might have for gauges they’d like to see. I started with this one since it rarely changes, so it was a good beginning project. I’m thinking it might be fun to make a series of gauges that are visually tied in to the industries they represent (old-timey oil pressure gauges for energy markets, high-tech digital gauges for tech stocks, auto speedometer style gauges for transports, etc.) Any and all input is welcome.

  166. GSsucks

    AGQ / Phil – Thanks for the advice.  I went ahead and doubled my position in AGQ $180 puts per your initial suggestion….at about a dollar per contract.  As for the time premium difference, I had sold the AGQ puts we bought for our $25KP for $8 on 08/24 and bought these on 08/26 when they went back down to the $4′s, thinking it would only be a couple of days before they hit $8 again.   The difference in time-to-expiration about the prior trade and this one SEEMED minimal
    I agree I should have put a stop loss for 20% but whenever I use those, it seems I get burned because the price comes down enough to trigger my stop and then goes back up like bonkers.  The QQQ calls last week were a good example.  I sold at $.20 (after buying at $.30) and they went back to $.80 in the next hour or so.
    I’m trying to break the bad habits.  With your advice, hopefully I can become a better (than now) trader.  On a positive note, I do have some long positions (SNGX, ZLCS, AMRN) so I’m not 100% short on oil, gold and silver….only about 60% lol.
    Have a great weekend.

  167. GSsucks

    MrMocha-  In the words of the great Michael Jackson, you are not alone.  I’ve single-handedly destroyed many trade ideas by going into them.  One of my friends once half-joked that he’d pay me to sell a certain stock because he was also holding it and he was sure it wouldn’t go up until I sold.

  168. GSsucks

    Phil or anyone else – Have you guys ever experienced a buyer (caller/putter?) exercising a call or put YOU had sold BEFORE expiration day?  It seems every time I cover a position by selling something against it (i.e. selling Sept $45 TZA calls yesterday against some October $45 TZA calls I own), the "cover" takes off and goes In-the-money.  In the case of those Sept $45 TZA calls I had sold, they were up to $3 in the money today so I rushed and bought them back, then sold Sept $48 TZA calls instead….fearing that the caller/buyer might exercise them and wipe out my October TZA calls.
    Should/could I have waited until expiration day? 

  169. Cap

    What a week.

    Zero jobs ? 0 ? Exactly zippo ? Now c’mon what are the odds of a goose egg ?

    I made some decent trades upping my short exposure, but boy did I make some bad moves the past 1 1/2 days.

    Was short SpY call spreads and covered yesterday ! Winners but should have left alone.

    SPY – shorted the 10 am spike at 123 + and covered for small gain only to have SPY trade off 60 points into today.

    Went long SPY call spread at close yesterday thinking maybe we get a pump. wrong. Close out trade today For loss. Dumb.

    Pass on buying 120 spy puts late yesterday for 50 cent lotto ticket. Wrong move. Could have closed for 2.00

    Was short PCLN 540 call for 6.70. Closed yesterday for 2.10 instead of riding to 0 today.

    Just dumb moves and a little overgrazing in what otherwise was a good – but could have been great week.

  170. Cap

    I hate this about iPad. It changes words on you !

    Overgrazing ?? I said Overtrading dammit !

    How do I turn this off ?

    Anyone ?

  171. Kwan

    It looks like whitehouse.gov is setting an e-petition site.
    "We The People" will work like this: anyone 13 or older can set up a petition — but before it’s visible on the site they need to get 150 grass-roots signatures. If an entreaty receives 5,000 or more signatures within 30 days, it is guaranteed to receive an official response from a White House staffer." [via engadget]

  172. wappler

    Cap,
    In ‘Settings’ go to ‘General -> Keyboard’ and turn ‘Auto-Correction’ off.  That should do it.  Enjoy your weekend!

  173. jmm1951

    "All surveys placed U.S. average income  between 4th and 6th, after such powerhouses as Luxembourg, Bermuda, Norway, Equatorial Guinea and Qatar."
     
    These kind of comparisons are meaningless. I lived in Bermuda for many years, and it IS an affluent place, however the figures are massaged by having a small total population and a significant number of multimillionaire residents who reside there partly to avoid income taxes in other countries.
     
    It would be better to compare the earnings of average people like school teachers, cops, and nurses who are the backbone of every community everywhere and to also take into account the cost of living in each place, amount of paid vacation, and so on.

  174. jmm1951

    "And for those who have far less than the 30k wage earner this week truly sucked: Rice is making another new multi-year high today, gaining 1.45%, and has risen +36.0% in about 8 weeks."
     
    This is very sad. Bill Clinton’s administration forced Haiti to accept imports of cheaper US rice, which drove all the Haitian rice farmers out of business, and led to a huge increase in the number of people leaving the land and moving to Port au Prince in shanty towns, thus immeasurable increasing the loss of human life in the earthquake last year. Part of the reason why Clinton is now putting a lot of effort into helping Haiti seems to be to expiate the sins of his administration.
     
    On the other hand, you have to blame the Haitian farmers for not paying off the right politicians in Washington. What were they thinking?

  175. Pharmboy

    elliott – very nice!  Maybe a oblong pill for biotech/pharma.  Just make it 80% for me!

  176. revtodd64

     Zero – Mental illness statistics
    By the way, the happiest people in the developed world live in Denmark.  Researchers found that this is because they have lower expectations!  http://news.bbc.co.uk/2/hi/6563639.stm.  Other research indicates that having good health (and health care system) is what really produces higher levels of happiness in a society.   http://news.bbc.co.uk/2/hi/5224306.stm
     
    Since I work with mentally ill people (who doesn’t, I guess, if the stats are right) I am also concerned about the alarming statistics in the United States.  On the one hand we need more mental health services and budget cutbacks are not helping.  However, the country to country comparisons aren’t easy to make.  If you believe statistics, there is little depression or mental illness in Africa, but then there are few therapists, so who is going to make a diagnosis?  Our health insurance system forces mental health providers to make a diagnosis in order to get reimbursed.  Some less ethical therapists will actually discuss with you what diagnosis you are comfortable with being on record.  The insurance companies are forcing a medical model of diagnosis on to the mental health system, complete with so-called "evidence-based" practices, that encourages giving people a diagnosis in order to get therapy.  The real beneficiaries of the system are pharmaceutical companies who sell anti-depressants and so on, since it is far cheaper to give someone Prozac than to get them counseling to get over depression.  
     
    Don’t get me wrong, some people really need medications.  There are amazing drugs for serious mental illnesses like schizophrenia and bipolar disorder that help people function in society.  But drugs cannot cure the sense of anxiety and meaninglessness that is plaguing our society.  A good jobs bill would probably cure many peoples’ depression.  I don’t mean to oversimplify the issue in such a short space, because mental illness is as complex as the number of people in the world.  
    By the way, the happiest people in the developed world live in Denmark.  Researchers found that this is because they have lower expectations!  http://news.bbc.co.uk/2/hi/5224306.stm

  177. jromeha

    Cap- I don’t have an iPad but on the iPhone 4 you go to settings>general>keyboard

  178. jromeha

    Then turn off auto-correct

  179. Nkhan

     Hey Everyone,
    Does anybody have a good site to track financial news coming out of Europe this weekend? I usually use CNBC europe, but I’m sick of the CNBC site.
    Thanks in advance

  180. Phil

    You can go to the WSJ and change the "edition" button from US to Europe.  I like to do that when I want to read things from that perspective.   The Financial Times is also excellent.  

  181. stratdaddy

    Speaking of iPad/iPhone, is there a way to change how the comments are ordered on IOS devices? They are ordered oldest to newest as you scroll to the bottom of the page on a PC based browser, but newest to oldest on iPhone/iPad. It’s a nuisance I’d rather turn off if possible.

  182. jomptien

    Phil,
    Do you still have the name and contact info from your man at IB? Thanks

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